Ripple Wants Government Regulation of Cryptocurrency

I have always believed regulation was inevitable and this is actually one of the reasons I invested in Ripple.  It’s no surprise that they are calling for regulation as they benefit the most.  As worried about them as I am (saving for another article) this is an excellent hedge against this inevitability.  Ripple stands to profit from this as it already has very good relationships with big finance and governments.  Any regulation is very likely to benefit Ripple the most.

Ripple’s, Ryan Zagone, ironically titled, “head of regulatory relations” has called on the UK to adopt 3-regulatory moves and has suggested they take a cue from Japan.  This is both good and bad, regulation, if fair and easy to follow can remove uncertainty and strengthen the countries that do it right.  I think Japan is a good example of regulation that has gone right and helped cryptocurrency flourish.

Zagone has called on the three issues to be regulated “namely consumer protection, financial stability and anti-money laundering “.  Consumer protection is a given and I wonder why no one has also said “insurance coverage” as this would take most of the risk out of holding cryptocurrency and the risk of theft and hacks.  When it comes to “financial stability” it depends on what he means and what the UK government would take it to mean?  I would take it that this would be the part that would help out Ripple and possibly stunt the growth of competitors to Ripple.  When it comes to anti-money laundering this is a given but again, how do you do it without harming or offending law abiding citizens?  Or will these laws and regulations be a pretext for both Ripple and Big Banking to squash the abilities of everyone else?

The UK Central Bank’s, Mark Carney has said the following about cryptocurrency.

  • “The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities,” Carney said in a speech on Friday.
  • “A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system,” Carney said.
  • Carney also slammed the ability for cryptocurrencies to fulfil the role of money, saying they are “failing” as a medium of exchange and are “proving poor short-term stores of value.”
  • “This extreme volatility reflects in part that cryptocurrencies have neither intrinsic value nor any external backing. Their worth rests on beliefs regarding their future supply and demand —ultimately, whether they will be successful as money.”
  • “At present, in my view, crypto-assets do not appear to pose material risks to financial stability,” Carney said.

Well, Mr. Carney was as honest as he could be, from the banking sphere and without losing his job.  I agree that there is almost nothing backing most cryptocurrencies, aside from mining investment.  However, this is about the same, if not better than fiat which is printed without any backing of assets since the gold standard has long been abandoned.  But let’s read between the lines, he wants regulation and he wants cryptocurrency held to the same standards as traditional finance, but at the same time slams it as being a poor store of value (like Soros who now says he’s investing).  Regulation will be tricky, because you are then giving all cryptcurrency legitimacy as currency by regulating it as such or even to traditional financial standards.

Everyone has their own interest in all of this but it will be interesting to see how this plays out.  The game is different now and governments cannot easily seize crypto assets, nor can they shutdown major players who can move away from their jurisdiction with the click of a button.  If smart people are in charge of regulation they will do it right, but if bankers alone are involved, and continued to feel threatened, I predict carnage, and that it will ultimately harm or even topple our current financial system.

Let’s hope things go smooth and that regulators are not influenced too much more when it comes down to it.

 

Ripple’s First Central Bank Contract with Saudi Arabia!

This is huge news for Ripple but apparently at the time of writing Ripple has tumbled more than 5% to .957 USD (under a dollar now).  To be honest I do hold Ripple but I believe my analysis to be unbiased.

The news is huge that Ripple will help Saudi Arabia settle foreign currency transactions and shows Ripple has proven itself in the large scale banking and even central banking industry.  It looks like other gulf countries including the UAE (United Arab Emirates) are going to be involved as well which could be really huge for Ripple.  One thing that many have said though is that none of these banking organizations involved are really interested in XRP.  They are using Ripple’s network but these transactions are not being funded or traded in XRP itself.

Some industry analysts have speculated that Ripple’s relationship with big banks is so strong that it may have strong incentive in the future to literally kill/dissolve XRP.

Despite this my outlook on Ripple is strong with the reservations about it mainly being a tool for large banks.  Don’t get me wrong, the technology works well for transactions in terms of being low-fee, fast not having to sync the blockchain, very secure (aside from no first party wallets….) but can we trust this company to protect our interests and those of its large banking clients?

I think this is why Ripple has been volatile itself, from an investment standpoint it sounds great but also bad because Ripple is kind of a crypto-rebel by essentially being the tool that cryptocurrency was meant to fight or free us from (the tool of big banks and now Saudi Arabia’s central bank.).

To look at it from the other perspective though this could mean a huge rise for Ripple in valuation but it could also mean the opposite.  Ripple has carved out an incredible niche but at the same time risks alienating its main users and investors.  The question is what will Ripple as a private and centralized blockchain do?

I do agree the author of the quoted article above could very well have it right for the end game.   It’s a shame because Ripple solves a number of key issues while also introducing security and trust issues at the same time.  Ripple works well but will it literally sell us users and investors out to central banks in the future?

I’ve attempted to play the lotto and will seek Ripple’s comment on these concerns but regardless of assurances only time will tell where things head.

How Governments Should Handle Crypto and ICOs

First of all after seeing so much confusion, panic and misinformation in the news, it is about time each country made a dedicated website for cryptocurrency.  The winners will be the countries who clearly communicate their policy, laws and intentions on handling cryptocurrencies.

Now in all fairness things are moving so fast, governments have genuine reason to fear cryptocurrency (aside from illegitimate reasons…) with most ICOs being absolute scams.  The real reason is of course is that governments can no longer vote or control who can fund themselves, the internet and public will judge.  However, there are still good reasons to have regulation or at least accountability so ICO fraudsters cannot hide overseas and disappear with the coins they collect.  This is my position where I feel the majority of token ICOs have no intention of completing their projects.

Getting back to what government should do, it’s not only ICOs but also the laws surrounding the purchase, use and trade around cryptocurrency.

The first country(s) to make fair, easy and favorable laws surrounding ICOs and cryptocurrency may find itself literally walking into digital gold and could be the next Hong Kong or Singapore of the crypto-finance world.  It’s up for grabs until countries clarify and cement their policies with crypto.

The first step if I were a regulator would be to hold public consultation and establish a staterun/government website domain to encourage discussion.  I also imagine it will be a hard case for government going after their citizens or businesses because they could simply leave the country with their crypto.  I think this is one element that business and government doesn’t like, that they can no longer control what people do with their money.  Typically governments and banks work hand in hand to achieve specific goals but with cryptocurrency, much like the world-wide web (initially) they are trying to find a balance and also ways to reign in control.

This time is very different, there is a lot at stake for governments, banks, people and business.  If a government moves too aggressively against the crypto world it could find itself sidelined and in financial ruin while their citizens and businesses will flock to countries that treat them better.

One of the first known examples of staterun conspiracy to harm cryptocurrency is Poland’s recent Youtube campaign: https://cryptoslate.com/polish-central-bank-caught-funding-anti-cryptocurrency-youtube-campaign/. They can’t be the only one and we know because of the well-timed press-conferences from various countries that threaten to ban ICOs or the currency outright.  On that note, as an investor this gives me more confidence than ever.  If crypto isn’t a big thing, then governments wouldn’t be talking about it.  The fact they warn so much about crypto suggests that governments and banks are well aware it is here to stay.

It could be that some governments are just playing games and waiting to see how things play out.  Perhaps internally if they see their attacks on crypto don’t kill it then they’ve already accepted that they will stop the fight against crypto.  Personally I think they are well aware that they cannot stop it and are maybe buying time so they can launch their own like Japan, Russia and China have announced.

I don’t think there’s a direct comparison but this standoff reminds me of the anti-piracy fight.  It used to be a fringe and underground element, but with crackdowns it actually has become more prevalent and easy for people to engage in piracy. Don’t get me wrong, crypto is not at all illegal or wrong (as compared to piracy) but the governments are essentially treating the crypto world the same way.  Much like the rule of investment after your strategy fails, trying again “won’t be different this time” I believe.

What do you think, how can governments handle crypto better and how would you react to bans and other aggressive action against crypto and related businesses?

Petro Coin Is Venezuela’s Nicolas Maduro’s Sanction Hot Cryptocurrency Backed by Gold, Oil and Diamonds

The Petro Coin is a very exciting project announced by Venezuelan President, Nicolas Maduro.  What makes this project interesting is a bunch of firsts, this coin would be the first staterun cryptocurrency and is also backed by physical assets, namely 5 Billion Barrels of Crude Oil, Gold and Diamonds.  This is a solid coin and currency in its own respect.

Back in the days when fiat currency was significant, valuable and important, there was the “gold standard” where essentially the amount of currency in circulation and value was a direct reflection of how much gold it was backed by.  If executed as promised, the Petro Coin would achieve exactly this as a first in the crypto world.

Why do I think this coin will succeed if executed and implemented as marketed and planned?

Russia, China and Iran.  2/3 (Russia and Iran) are currently sanctioned and China has been threatened with sanctions.  Since the Petro Coin was founded as a way to restore wealth, prosperity and escape the sanctions guess who, as an ally of Venezuela and also parties with a vested interest would both profit directly and indirectly from the Petro Coin’s success?  I anticipate massive amounts of money would pour in from Russia, China and Iran even if it is discreet and indirect.  If I am right I would expect that this coin could be hugely successful and a top coin.
On top of this President Maduro has recently asked allies in the region to get on board with the Petro project.

What are some downside risks?

Judging from social media some are very averse for various political reasons to this coin.  Another risk would be that this coin would almost certainly have trouble, be outright prevented, or removed from any Western based exchange.  Being listed on major exchanges is a key success because if no one can buy or trade your coin then it’s not going anywhere fast.  However, there are enough overseas exchanges to take care of this issue, and I suspect Venezuela would have enough resources to create their own exchanges to solve this issue. *Update Petro Coin’s ecosystem will apparently allow you to exchange and trade in physical assets, cash and other coins so the problem appears to be solved from the outset.  However, the boycott and difficulty in trading this coin are potential risks, especially if as I anticipate, some governments would simply just make it a crime for their citizens to hold or trade in this coin.  It would be interesting to see where this all heads.

It’s also been reported that Venezuela’s Congress (the opposition) has declared this currency and coin completely illegal.  However, it also appears that this has no legal bearing and will not prevent the project from moving ahead.

Should I invest in this coin?

I can’t answer that because only hindsight can clearly show us.  I am planning to invest in it as long as the project is executed as marketed and planned.  Politics aside I think this could be a win-win for people inside and outside of Venezuela.  If this coin helps Venezuela escape sanctions this would almost certainly lead to an improvement for the people of Venezuela since sanctions mainly end up hurting the people (especially the poor).

Early Success

Apparently Petro has raised nearly 3/4 of a billion USD in their initial private sale.  I’m again calling this as a positive sign and I highly suspect numerous state Sponsors from around the world contributed the funds even if indirectly.

In that sense Petro could be an incredibly strong and long-lasting cryptocurrency.  The funding behind it is already proof of concept.

On top of that Venezuela seems very serious about making their country a haven for all things crypto.  This coin could stabilize their economy and also make them the new “Singapore” of the cryptoworld if they continue to play this right.  Despite some negative comments and feedback, this point cannot be denied or overlooked in terms of investment.

My feedback

It’s been very difficult to find details about this coin, I’ve read various news articles and only recently found the official website.  They really need to do more marketing and make a proper URL/domain for this coin and not just a government subdomain.  I am certain fraud with this coin has already gone on with so many fake Petro sites that I’ve found which seem to be collecting coins.  They should pay particular attention to this as I imagine a lot of people will be calling Petro a scam because of these fake sites.

It also hasn’t been made clear of their plan but from my reading of the official site it appears initially Petro will be sold as an Ethereum token that will then be converted to their own blockchain and wallet once they have completed it.

Another risk is that people like me may begin to lose interest or even forget about it because I was hoping to get in on the private sale.

With that said, I’m not investing in any ICOs for the most part but Petro is one I am interested in for many reasons stated earlier in this post.

Where to find the official website

It took a lot of digging but here is the official Petro Coin website: http://elpetro.gob.ve/index-en.html

Non-Existent Service in the CryptoCurrency Business Will Have Long-Term Impact

Right now the crypto market is red hot and like any market that’s so hot, company’s at the time often forget that customer service is for the long-term and that by not treating the customer right, eventually enough will move on.  Crypto company’s won’t be feeling the pinch right now, but once a downturn hits is where we will see this play out in my opinion.

I’m speaking from my own experience, frustration and concern here.

I have dealt with many different company’s and most of them will NEVER reply to you.  Even worse most of them don’t have a simple contact form, e-mail address, phone number or built-in support system (I guess in all fairness it’s like getting help from PayPal only a bit worse).

A sampling of random experiences and exercise in patience.

Coinbase

It took a long time to get “verified” enough to even make a purchase with their high fee system but it is a quick, expensive and easy way to get into crypto once you are verified.  However one thing I was unhappy with is that you cannot purchase directly to your own personal wallet (I don’t like leaving money in exchanges because of MtGox, Bitfinex and other hacking incidents where people lost real money).  All I ever got was an apologetic generic reply and nothing more.  If you’re having serious issues it is unlikely this company will ever help you so there is the real risk of their mistake or other problems costing you time and money.


Josie replied:

Gatehub

I sent them USD in order to exchange for some Ripple but without my permission they converted it into EUR so I lost money on the conversion and wire.  The reason I sent USD is because they said it was for USD and to top it off the bank was in Lithuania (a little scary to send to an unregulated market and does set off some alarm bells and concerns).  This is typical of the crypto industry and I do think it will come back to bite and haunt them.

I did ask Gatehub to make it right but never received any response after a number of weeks.  Even to verify my account it literally took a number of months to even get a response and to complete the process.  During these bullish times anything will fly because there are only so many alternatives but all bets are certainly off after that point.

Poloniex

Poloniex is one of the biggest exchanges out there but you can find complaints all over reddit of people not being able to verify their account for months.  I uploaded my information only to be sent through a third party verification process.  This required me to use a live webcam that perfectly captured the details of my ID live (who has a webcam these days let alone one that would get the crazy macro shot they require!).  The process told me the details weren’t clear enough, even the sending a selfie with your ID method was not supported.  And if you didn’t get it right at that moment or even if you had no webcam you can’t even try to verify yourself again for several hours.  Needless to say I’ve moved on and so have many others.

Kraken

I simply won’t trust them, initially I didn’t know who they were but somehow I was signed up without my knowledge or consent.  I kept getting so much spam from them I didn’t even realize they were any sort of legitimate company.  The fact that they essentially marketed themselves through spam and forcefully signing up clients makes me not trust them at all (even less than many other firms).

Coinmama

They aren’t cheap but I will give them this, they were quick with verification and when there are issues they reply usually within a number of days with an actual human response.

What Does This Add Up to?

Customer service in the crypto world is non-existent and so is the trust factor and reliability of many of the companies involved.

A very nervous and frustrating experience even for veterans and those who understand crypto, my level of trust in these companies is quite low.   They don’t even have phone numbers or addresses for the most part and those that do you can never get to a human usually.

When things work fine you shouldn’t have a need to contact these companies, but when there are issues it is very likely you will be ignored regardless of the issue, or any reply is not helpful or may come weeks or months too late.

 

Ethereum’s Issues Stem From the Basics

Ethereum is certainly #2 in the market capitalization only second to Bitcoin but it doesn’t mean it’s as easy to use.  In fact I suspect my recent experience is what is keeping it from rising, Ethereum makes me nervous and reluctant to use it everyday. As someone who has used the client’s/wallets for both I find Ethereum’s is cumbersome and at times impossible to use, thus preventing the user from using it to do any transactions at all.

Imagine if a simple eTransfer or Wire from your bank took over a week to initiate?  That’s way too long and beyond the purpose of the infamous but in practice non-realtime transactions in the cryptoworld.

I spent nearly a week syncing 4 months of blocks!

I needed to do a transaction in Ethereum and opened up my Ethereum Client which slowed my whole computer down and ultimately wouldn’t update past a certain point.

I consider myself an above average user who is good at troubleshooting issues.

I updated to the latest Ethereum client and that still didn’t fix it.

Some users suggest deleting the “chaindata” folder and that didn’t fix it.

Eventually I decided to do delete the whole “Ethereum Wallet” folder (never do this without backing up your keystore files safely).  Also be aware that this folder “Ethereum Wallet” is not where your keys/wallet data are stored.  In Linux they are stored in “~/.ethereum/keystore”which is very misleading when you have a “~/.config/Ethereum\ Wallet” (which is not where your wallet data or keys are stored).  I stress this because I came across many who had sworn off the Ethereum Coin and team because of this confusion where they lost their keys and ultimately their investment and coins.

The solution was to delete “~/.config/Ethereum\ Wallet” but the fun didn’t stop there.  It was updating so slow through the missing blocks that it felt like I was mining the entire blockchaining (you could literally count 1 by 1 as it was processing or sometimes it would take minutes on a single block).  I’ve been able to sync the whole Bitcoin or Litecoin Blockchain more quickly and without or much impact on my computer.

I decided to switch the chaindata for Ethereum to SSD it did speed things up but not significantly and still took about a day to catch up and my computer still did slow down.

What I Learned About Ethereum

For all of its features I think the team is out of touch with getting the basics right first, as evidenced by the “Parity” fiasco where through no fault of the users people have essentially lost or have 160M worth of Ethereum coins frozen and lost presumably forever.  I have never seen this with another major coin.

Nor have I seen or experienced the confusion on basics of why their client is so complex.  Why does it use another program geth to sync the data?  Why are there so many different choices, fast sync (which didn’t help speed things up for me), a MIST client and so many different confusing and unnecessary choices and complexity?

I like how I can just download the Bitcoin client or Litecoin client and it works simply, there’s no guessing or confusion.

When it comes down to it, if someone with my background is having to troubleshoot and it slows me down from doing transactions, or I fear my coins could randomly be lost it doesn’t bold well for Ethereum’s future.  I don’t mind leaving other wallets running but Ethereum just takes too much computing with SSH so it’s not practical.  I will consider Ethereum a wise investment with some risks I’ve highlighted above but for any cryptocurrency to truly be accepted and successful it must be secure, fast, reliable and easy to use (something which most cryptocurrencies still fail at if not for the reason that you require the whole blockchain to keep your money in your own possession or have to rely on dangerous uninsured third party exchanges or services that are often hacked).

As we can see below this is not a sustainable practice for cryptocurrency going forward and I will be posting more about how I think the future of crypto will be significantly different than we currently see.

Screenshot-Ethereum Wallet-19

Trading Cryptocurrency Emotionally Is Good For Me and Bad For You!

With all the hype of cryptocurrency driving all of the coins it creates both opportunities and risks depending on where you’ve bought in and your emotional state.
Emotional buying is for example hearing Bitcoin has hit $6000 USD and then buying it worrying that it is your last chance. In reality buying into new highs doesn’t leave a lot of room for comfortable declines which is why I never buy new highs but patiently wait for a strong pullback. But we must always remember the famous proverbs of “Be Fearful When Others Are Greedy”, “Be Greedy When Others Are Fearful”, “Sharp Rises Are Often Followed By Sharp Corrections”, “What Goes Up Must Come Down” which depending on the time period in general means manage risk, do not trade on emotion, and be prepared that markets can turn either way without warning or in a sudden bearish or bullish trend. If all goes wrong just remember “Buy Low, Sell High” of course as simple as these terms are very few of us actually do or achieve such simple sayings as the end result is often more complex based on a lack of discipline or abundance of emotion.

I fully agree with the many parties that say cryptocurrency is extremely risk, volatile and does trade like the stock market with even less safety and regulation. Therefore my approach is to treat such trading as extremely high risk stock investment with the goal of limiting risk and exposure.

In the case of Bitcoin if you look the chart for the past few years it has been extremely volatile and has had numerous crashes. A lot of people made a lot of money by holding and believing in the long-term value, but just as many lost huge amounts by panicking and selling off at the bottom. At the end of the day the best of us cannot always predict that we know the top or bottom of a market. Instead it is important to look at the fundamentals. Bitcoin is still #1 by market cap today, unless it were specifically banned around the world or the entire network or blockchain itself was compromised there’s no reason to panic based on this kind of emotion. I echo a similar sentiment when people rush to the markets when Bitcoin is the news when things are flying high is when you have the most risk. Before some of you think I’m suggesting to be a contrarian on a fundamental market I’m just saying you shouldn’t fight the trend or the market but be sensible. If you’ve made your own research or belief that a currency is in a bullish upswing then wait for an opportunity such as the “sharp correction” that has been the trend with large rises in cryptocurrency.

Stick to your plan unless the fundamentals have changed so unless Bitcoin has been banned around the world or the blockchain has been compromised or some other fundamental value of Bitcoin has been eroded it doesn’t make sense to dump it on a sharp decline (well it’s good for me and other holders) but for yourself it would probably disastrous.

I am mainly quoting Bitcoin but whenever I watch the charts of the top currencies by market cap I see a very similar trend usually, that often all currencies will be diving or climbing at the same time as a generalization.

The above strategy is only for coins that you have reason or proof have real value and long-term viability. If you have invested in a new ICO and could realize a large profit shortly after I would sell a large portion of that position and continue to hold. In that way you’ve maximized your profit and limited your risk exposure.

I’m going to give you an example of when I bought into some Litecoin. I noticed a sharp decline that eventually hit 5% Monday morning just after midnight and keep watching it. Once the market hit -5% and climbed to -4.5% I bought without regret even though I observed later on the day the decline hit as high as about -8-10%. Obviously buying lower would have been better but in recent trends I’ve seen fast recoveries I was happy with the likelihood that Litecoin would recover my 4.5% discount and more in a few days and it has currently risen to +5.89%. Not a bad spread for less than 24 hours! I think the key is not to be greedy and try to plan what the purpose is.

In my case I am watching some of the top 20 coins in market cap and looking for the chance to trade some Litecoins as they go up and some of the others decline to maximize profit and minimize risk.

Going back to the point of the article is that try not to be emotional when buying or selling, but know that everyone’s actions create an opportunity on either side.

Good luck to all of my fellow traders and please share your thoughts and strategies in the comments!

Disclaimer I am by no means giving out financial or trading advice and am simply giving my opinion, experience and rational for my personal decisions.